UUGRY
United Utilities Group PLC
$36.86
Stable Earnings Power
85%
P/Adj-EPS × Normalized Multiple
Mild
·
Conviction
Fair Value
Trading 2.1% below fair value
You pay
$36.86
Bear
$32.93
Fair
$37.63
Bull
$42.34
Bear
$32.93
-10.7%
$2.35 × 14x P/E
Fair
$37.63
+2.1%
$2.35 × 16x P/E
Bull
$42.34
+14.9%
$2.35 × 18x P/E
Adjust Assumptions
16.0x
2.35$
Key Value Driver
Normalized P/E multiple (16x base case)
Implied Market Multiple
15.7x
Summary
Applying a 16x P/E to adjusted EPS of $2.35, the base-case value is $37.63 per share. DDM cross-check: $153.30.
Warnings
The company pays out 118% of its profits as dividends. That leaves little cushion — the dividend could be cut if business slows down.
Dividend-based valuation: $153.30 (above our primary estimate by 307%). Large gaps may signal the dividend doesn't reflect full earning power.
Financial statements were converted from GBP into USD using GBPUSD at 1.3518 USD per GBP.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples